The South Korean government and the ruling party are considering postponing the implementation of a cryptocurrency investment profit tax by an additional three years, according to recent reports.
This move would delay the taxation from January 2025 to January 2028. The government is expected to finalize its decision later this month when it announces next year’s revised tax law.
The discussion on crypto taxation began in 2021 during the Moon Jae-in administration when the National Assembly passed a bill to tax cryptocurrency profits. Originally set to start in October 2021, the implementation was pushed to January 2023 due to the upcoming presidential election.
Under the current Yoon Suk-yeol administration, it was further delayed to January 2025. Concerns that taxation might burden investors and disrupt the market have been the primary reasons for these postponements.
Local news publications highlight growing dissatisfaction among South Korean investors regarding crypto taxes, especially with the recent downturn in the cryptocurrency market. Data from the Financial Services Commission (FSC) shows a significant increase in the number of crypto investors, reaching 6.45 million as of May 2024. Despite this growth, the daily trading volume on domestic exchanges has drastically dropped from 20 trillion won in March to 2 trillion won recently.
Market insiders warn that imposing the cryptocurrency income tax next year could lead to a further decline in trading volumes as investors might exit the market. Additionally, there are concerns about the government’s readiness to implement the tax. Critics argue that the necessary systems and institutional preparations are not yet in place, making full-scale taxation impractical.
The debate on crypto taxation in South Korea continues to be influenced by public opinion. Some opposition leaders have criticized the government’s delays, attributing them to a lack of adequate preparation. They argue that the government should have taken the necessary steps to implement the tax, regardless of public sentiment.
While the government prepares to announce its revised tax law, the potential delay in cryptocurrency taxation remains a critical issue for both investors and policymakers in South Korea.
